Pound Australian Dollar (GBP/AUD) Exchange Rate Claws Back Losses as Fuel Crisis Calms

Pound Australian Dollar (GBP/AUD) Exchange Rate Inches Higher as Fuel Supplies Stabilise

(Updated 14:30, 30/9/21) The Pound Australian Dollar (GBP/AUD) exchange rate has regained some ground today, though it remains near a three-week low, as the UK’s fuel crises begins to subside.

Despite reports that some forecourts are still running dry as the unprecedented demand for fuel continues, the situation is improving. Meanwhile, army drivers remain on standby to help replenish supplies.

The news seems to have had a positive effect on the Pound (GBP) today, which has managed to gain against most of its rivals, including the Australian Dollar (AUD).

However, GBP’s upside is limited. While it has bounced off recent lows, it is still subdued, as a number of economic woes weigh on the UK currency.

The supply chain and energy crises are expected to worsen as we head into the colder winter months, compounded by soaring inflation and a cost-of-living squeeze. At the moment, UK economic morale is low.

Original article continues below:

Pound Australian Dollar (GBP/AUD) Exchange Rate Dented by Supply Chain Concerns 

The Pound Australian Dollar (GBP/AUD) exchange rate fell overnight and continued its descent into the start the European session. 

The downside in GBP/AUD comes as more supply chain disruption is expected for the UK as we approach winter, while the ‘Aussie’ enjoyed some positive data. 

Pound (GBP) Down as More Shortages Expected 

The Pound (GBP) has lost yesterday’s gains this morning, despite some positive data from the UK. 

The UK’s finalised GDP growth rate and business investment figures for the second quarter of this year were revised higher, printing at 5.5% (up from 4.8%) and 4.5% (up from 2.4%), respectively. 

The welcome results show that the UK’s economic recovery during April, June and July was faster and stronger than initially thought. 

However, concerns remain as the rapid recovery seems to have stalled in the third quarter of this year. Ruth Gregory of Capital Economics commented: 

‘Overall, while the upward revisions to GDP are clearly welcome, Q2 was three months ago, and the recovery appears to have stagnated since.’ 

Meanwhile, despite the government insisting that the country’s fuel shortages are now under control, fears remain that the UK’s supply chain crisis will cause significant disruption for consumers this Christmas and further stifle the country’s economic recovery. 

Via The Times, Clive Black, a retail analyst at Shore Capital, said: 

‘I expect Christmas will be a nightmare for consumers. 

There will be food on supermarket shelves but there will be a distinct lack of choice. Shortages of labour have meant businesses have not laid down the same number of turkeys or planted the same number of crops and the HGV driver shortage is compounding the problem.’ 

In addition, Black expects shortages in electronics goods, toys, bicycles, and furniture, due to shipping disruption, while prices continue to rise. 

Such shortages and high prices could dent consumer spending over Christmas, leading to less economic activity over the crucial holiday period. 

Australian Dollar (AUD) Firms as Optimism Improves 

The Australian Dollar (AUD), meanwhile, is firming against the Pound today after some positive data overnight. 

The number of building permits approved in Australia in August unexpectedly rose by 6.8% versus the 0.5% decline that economists had predicted. 

This was the first rise in the number of approved dwellings since March, as increased household savings, record-low interest rates, and confidence in the housing market boosted permit applications. 

In addition, a slight improvement in risk appetite is also supporting the ‘Aussie’ today, after serious concerns over the global economic recovery weighed on AUD through Monday and Tuesday. 

The Australian Dollar has also enjoyed a more optimistic outlook in recent weeks, as lockdown restrictions are being eased and plans are in place to allow international travel again. 

In the latest development, Australia’s visible digital seal (VDS) project, an internationally recognised digital vaccine passport, is weeks away from completion. Once the technology is ready to be rolled out, the country will reopen its borders, which is expected to boost travel and tourism revenue. 

This slight increase in optimism seems to be giving AUD the edge over GBP so far today. 

GBP/AUD Exchange Rate Forecast: Could a Risk-Off Mood Boost GBP? 

It’s unclear as of yet whether GBP/AUD will be able to make a comeback during the European session. 

On the one hand, the UK’s fuel crisis is subsiding and the stronger economic data for the second quarter of this year may provide a boost. In addition, the tailwind from Australia’s new-build boom may die down as the day goes on. 

On the other hand, the UK’s economic outlook for the winter looks bleak, with the supply chain crisis and soaring energy prices expected to hit businesses and households. 

A deciding factor could be the global market mood. If sentiment sours again, GBP/AUD may be able to claw back some of its losses. 

Samuel Birnie

Contact Samuel Birnie